Under the headline, "Prescriptions to Revive Recovery," the economics editor of the Wall Street Journal, David Wessel, endorses a list of ideas to spur economic growth in America that are almost comically bad.
He writes, "Perhaps state-owned enterprises Fannie Mae and Freddie Mae should be deployed more aggressively to refinance credit-worthy underwater borrowers." Yeah, because government propping up the housing market has been such a big success in the past, and because tax money taken from renters or people who paid off their mortgages should be used to help those who made bad buying decisions? More: "Perhaps the federal government should buy foreclosed homes from banks and give them to local governments to fix up and rent." Because local governments don't have enough responsibility already, they should also be landlords competing with private landlords and with private home sellers? That'd do wonders for the real estate market. If banks want to sell foreclosed homes, let them do so at a market-clearing price to private buyers, not to the federal government at bailout prices.
Another Wessel suggestion: "Nudge employers to hire with a tax credit for every worker they add or extra dollar they spend on payrolls." Many of the objections raised to the Bill Bradley plan would apply here.
More: "just because something will make executives feel better doesn't mean it's a good idea. Declaring a tax holiday for repatriating foreign earnings will boost spirits, but isn't likely to add many jobs or much investment, based on academic scrutiny of the 2004 tax holiday." Mr. Wessel offers no hyperlink to this "academic scrutiny," but he's likely relying on the National Bureau of Economic Research study misleadingly summarized in a recent New York Times article. The study in fact concluded that while the 2005 tax break "does not appear to have spurred the domestic investment and employment of firms that used the tax holiday to repatriate earnings from abroad, it may still have benefited the U.S. economy in other ways. The tax holiday encouraged U.S. multinationals to repatriate roughly $300 billion of foreign earnings and pay most of these earnings to shareholders. Presumably these shareholders either reinvested these funds or used them for consumption. Either of these activities could have an effect on U.S. growth, investment, and employment."
More: "many U.S. roads, subways and airports seem Third World compared with China's new ones. How about a quick round of infrastructure maintenance." More government spending!
Another thing Mr. Wessel says would be a plus would be " appointing and confirming regulators for a growing list of vacancies." Because that's really what's holding the American economy back, the lack of regulators, right? I know sarcasm is no substitute for an argument, but anyone on the left who was worried that Rupert Murdoch was going to turn the Wall Street Journal news section into some kind of free-market right-wing propaganda organ should read Mr. Wessel's column and relax. Those of us actually hoping for a free-market approach will have to look elsewhere.
